Microeconomics

Which of the following statements is true?

  1. Free trade will benefit all workers in a nation equally.
  2. As a result of specialization some workers will be displaced and harmed in the short run by free trade.
  3. Free trade leads to lower wages for all workers in both nations.
  4. Specialization will result in a decline in an industry, and none of those workers will be able to find other jobs.

 

Suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will __________ .

  1. benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole
  2. harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole
  3. harm chocolate workers in the short run, harm lace workers, but benefit the nation as a whole
  4. benefit chocolate workers, harm lace workers in the short run, but harm the nation as a whole

 

Question 13 of 20

5.0 Points

Suppose Panama produces only two goods, bananas and hats. If Panama has a comparative advantage in bananas, a move toward free trade will __________ .

  1. harm hat workers, benefit banana workers, but benefit the nation as a whole
  2. harm hat workers, harm banana workers, but benefit the nation as a whole
  3. benefit hat workers, harm banana workers, but harm the nation as a whole
  4. benefit hat workers, harm banana workers, but benefit the nation as a whole

 

Question 14 of 20

5.0 Points

Which of the following situations will arise in the domestic market following the removal of an import quota?

  1. imports increase, domestic production increases, prices increase
  2. imports increase, domestic production decreases, prices decrease
  3. imports decrease, domestic production increases, prices decrease
  4. imports decrease, domestic production decreases, prices increase

Question 15 of 20

5.0 Points

For a nation to have __________ in producing a good, it must have a lower opportunity cost of producing that good than the other country.

  1. a comparative advantage
  2. an absolute advantage
  3. an autarky advantage
  4. both a comparative advantage and an absolute advantage

Question 16 of 20

5.0 Points

Suppose there are only two nations, Atlantis and Pacifica, and only two goods, surfboards and kayaks. If Atlantis produces only surfboards, it can make 50 per day. If Atlantis produces only kayaks, it can make 75 per day. If Pacifica produces only surfboards, it can make 75 per day. If Pacifica produces only kayaks, it can make 75 per day. After trade begins, __________ will specialize in the production of surfboards and __________ will specialize in the production of kayaks.

  1. Atlantis; Atlantis
  2. Pacifica; Pacifica
  3. Atlantis; Pacifica
  4. Pacifica; Atlantis

Question 17 of 20

5.0 Points

Exporting nations often agree to voluntary export restraints in an attempt to __________ .

  1. employ more workers in the importing nation
  2. avoid more restrictive trade policies
  3. increase global welfare
  4. decrease inflation

 

Question 18 of 20

5.0 Points

An import ban results in __________ .

  1. a decrease in the supply of the product
  2. an increase in the product’s price
  3. a decrease in the quantity of the product bought and sold
  4. all of the above

 

Question 19 of 20

5.0 Points

Suppose there are only two nations, Atlantis and Pacifica, and only two goods, surfboards and kayaks. If Atlantis produces only surfboards, it can make 27 per day. If Atlantis produces only kayaks, it can make 18 per day. If Pacifica produces only surfboards, it can make 32 per day. If Pacifica produces only kayaks, it can make 24 per day. After trade begins, __________ will specialize in the production of surfboards and __________ will specialize in the production of kayaks.

  1. Atlantis; Atlantis
  2. Pacifica; Atlantis
  3. Atlantis; Pacifica
  4. No trade will occur.

Question 20 of 20

5.0 Points

The consumption possibilities curve shows the combinations of goods that can be __________ .

  1. consumed by a nation before trade begins
  2. consumed by a nation after trading begins
  3. produced by a nation before trading begins

produced by a nation after trade begins